Economic Interest versus Social Conscience Signing Bilateral Investment Treaties – Does Human Rights Matter?

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Economic Interest versus Social Conscience Signing Bilateral Investment Treaties – Does Human Rights Matter?

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Vadlamannati, Krishna Chaitanya

Abstract

Both theoretical and empirical literatures have identified several channels through which bilateral investment treaties encourage FDI in developing economies like providing investment protection guarantees and so on. Economic and political interests are said to be the driving forces behind signing the investment treaties. However, there is virtually no systematic evidence on whether countries consider human rights performance of the host country while signing bilateral investment treaties. We make an attempt to examine this question by considering 87 developing countries over a period 1980-2006. Different estimation techniques like: negative binomial and poisson models are used. The results demonstrate that economic interests drive bilateral investment treaties to human rights performance. Economic interests measured by economic development, long-term investments, return on investments and macroeconomic risk are significant while human rights performance namely, political terror scale and physical integrity rights remain consistently insignificant. The results are robust to the use of alternative estimation techniques and sensitivity analysis. These results highlight that economic interests preside over social conscience while countries signing investment treaties.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15431.

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Date of creation: 25 Dec 2008
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Handle: RePEc:pra:mprapa:15431

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Find related papers by JEL classification:
P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Linkages
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-05-30 (All new papers)

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Grossman, Herschel I & Kim, Minseong, 1996. " Predation and Accumulation," Journal of Economic Growth, Springer, vol. 1(3), pages 333-50, September.
Other versions:
- Herschel I. Grossman & Minseong Kim, 1997. "Predation and Accumulation," NBER Working Papers 5357, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Dunning, John H, 1973. "The Determinants of International Production," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 289-336, November. [Downloadable!] (restricted)
Schneider, Friedrich & Frey, Bruno S., 1985. "Economic and political determinants of foreign direct investment," World Development, Elsevier, vol. 13(2), pages 161-175, February. [Downloadable!] (restricted)
Eric Neumayer, 2004. "Do international human rights treaties improve respect for human rights?," Law and Economics 0411003, EconWPA, revised 06 Jun 2005. [Downloadable!]

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